Two Republican lawmakers Tuesday accused the Quinn administration of cutting a “backroom deal” with the largest state employee union that will dismantle efforts to crack down on Medicaid fraud.

Sen. Dale Righter of Mattoon and Rep. Patti Bellock of Hinsdale said Gov Pat Quinn should have continued to fight an arbitrator’s ruling last summer that state employees, rather than a private contractor, should be assigned to review Medicaid rolls to remove people who are no longer eligible for benefits.

Implementation of a screening program was part of the Medicaid reforms passed by the General Assembly in 2012 that were intended to rein in the spiraling costs of the $15 billion program. The state awarded a contract to Maximus Inc. to perform the review work.

However, the American Federation of State, County and Municipal Employees filed a grievance saying the work should be performed by state employees, not a private vendor. An arbitrator ruled in favor of AFSCME.

On Tuesday, the arbitrator issued a supplemental ruling allowing the Maximus contract to be terminated April 30, with the state hiring more than 500 new workers to conduct the eligibility reviews.

“This isn’t a walk back, this is a turnaround and sprint away from the cornerstone of the (Medicaid) reforms,” Righter said.

Righter said the review work by Maximus has been a “stunning success,” with some 216,000 ineligible Medicaid recipients removed from the rolls. State officials said the vast majority of those cancellations were the result of clients not responding to requests from the state to verify their income or residency.

Mike Claffey, a spokesman for the Department of Healthcare and Family Services, said the state needed to ensure it would have access to some of Maximus’ operations while the transition to used state employees is underway. For example, Maximus will continue to operate a call center, computer services and mail room operations for the Medicaid review until as long as June 30, 2015.

“It was absolutely vital that we be able to maintain those,” Claffey said. “We were concerned about losing the ability to do data matching at the end of this year.”

The original arbitrator’s order called for the Maximus contract to end at the end of this year.

“Maximus will still do work, but it won’t be the same work they are doing today,” Righter said. “That’s the key. The work they are doing today has resulted in of every five people who are examined, two are being found ineligible. That’s a stunning number.”

AFSCME argued that the contract was wasteful since a final determination of whether to terminate a recipient still had to be made by a state worker. Maximus identified cases that should be reviewed and made recommendations for termination, but the final determination is made by the state.

Page 2 of 2 - The state has agreed to hire 520 additional staff to handle the review process.